REPORTABLE           

IN THE SUPREME COURT OF INDIA          CIVIL APPELLATE JURISDICTION

      CIVIL APPEAL NO.5645 OF 2008         [Arising out of SLP(C) No. 3459 of 2007]

Bharat Sanchar Nigam Ltd. & Anr.        …….Appellants

Versus

Motorola India Pvt. Ltd.          ….Respondent

J U D G M E N T

TARUN CHATTERJEE, J.

1. Leave granted.

2. This appeal is directed against the judgment and final order

dated 26th of October, 2006 of the High Court of Kerala at

Ernakulam in AR No 18 of 2006 whereby, the High Court

had allowed the prayer for appointment of the arbitrator at

the instance of the respondents and directed the parties to

submit their disputes to arbitration.

3. The pivotal questions that need to be decided in this appeal

are:

i) Whether  the  levy  of  liquidated  damages  under

clause  16.2  of  the  tender  document  is  an

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“excepted matter” in terms of clause 20.1 of the

said  document  so  that  the  same  cannot  be

referred  to  arbitration  or  looked  into  by  the

arbitrator.

ii) Whether  clause  62  of  the  special  conditions  of

the tender document will prevail over clause 16.2

of the general conditions of the contract.

4. The relevant facts, which would assist  us in appreciating

the controversy involved are narrated in a nutshell, which

are as follows:

The  appellant  had issued  a notice  inviting tender

dated  4th of  January,  2001,  calling  upon  the  eligible

bidders  for  turn  key  project  on  planning,  engineering,

supply, installation and commissioning of Indian Mobile

Personal Communications System in the telecom circles

of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh.

The  respondent  submitted  its  bid  in  response  to  the

notice inviting tender and after the technical, commercial

and  financial  bid  evaluation,  the  respondent  was

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awarded  the  tender  and  an  Advance  Purchase  Order

(APO) dated 5th of September, 2001 for phase I and Phase

II was issued to it by the appellant. The purchase order

provided,  inter  alia,  the  terms  for  payment  and  the

schedule  for  delivery  of  the goods.  It  also provided  for

liquidated damages in the event of failure on the part of

the  respondent  to  meet  with  the  delivery  schedule.

Clause  16.2  of  the  general  conditions  of  the  tender

document provided for liquidated damages to the extent

of 0.5% of the value of the delayed quantity of the goods

and services for each week of delay or the part thereof for

a period of upto 10 weeks and thereafter charge 0.7% of

the value of delayed quantity or part thereof, for a period

of  upto  10  weeks  thereafter.  It  is  the  case  of  the

appellants  that  the  respondent  had  failed  to  complete

phase I and phase II of the project within the schedule as

provided  in  the  tender  document,  and  therefore,

liquidated  damages  were  imposed  by  the  Tamil  Nadu

Circle of the appellant on 21st of May, 2004 under clause

16.2 of the tender document, quantification of which was

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beyond the purview of the arbitration agreement. There

was an exchange of correspondence between the Tamil

Nadu  Circle  of  the  appellant  alleging  the  delay  in  the

purchase  of  goods  and  the  respondents  denying  any

such  delay  and  objecting  to  the  levy  of  liquidated

damages.  On  24th of  March,  2006,  the  respondent

invoked  the  arbitration  clause  by  sending  a  letter

through its counsel to the appellants to which they did

not  concede  and  justified  the  imposition  of  liquidated

damages. The respondent filed an arbitration application

before  the  High  Court  of  Kerala  at  Ernakulam for  the

appointment  of  arbitrator  under  section  11  of  the

Arbitration and Conciliation Act, 1996 in respect of the

liquidated  damages  assessed  by  the  appellant.  In  the

counter  affidavit  filed in the  High Court,  the appellant

alleged  that  the  liquidated  damages  assessed  and

quantified  by  the  appellant  under  clause  16.2  of  the

tender document was an excepted matter as per clause

20.1 of the said document and, therefore, not arbitrable.

The High Court, as noted herein earlier, by the impugned

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judgment  allowed  the  arbitration  request  of  the

respondents  holding  that  the  imposition  of  liquidated

damages by the appellant was not an “excepted matter”

and therefore, subject to arbitration. It is this judgment

of the High Court, which is impugned in this appeal, in

respect of which leave has already been granted.  

5. Before proceeding further, we deem it appropriate to note

the  relevant  clauses  of  the  tender  document  and  the

purchase  order,  which  would  assist  us  in  determining

whether the matters alleged are an excepted matter.

Clause 16.2 reads as under:-

“16.2.  Should  the  tenderer  fail  to  deliver  the goods and services on turn key basis within the period  prescribed,  the  purchaser  shall  be entitled  to  recover  0.5%  of  the  value  of  the delayed quantity of  the  goods & services,  for each week of delay or part thereof, for a period upto  10  weeks  and  thereafter  at  the  rate  of 0.7% of the value of the delayed quantity of the goods and services for each week of  delay or part thereof for another 10 weeks of  delay. In the present case of turn key solution of supply, installation  and  commissioning,  where  the delayed portion of the delivery and provisioning of services materially hampers effective user of the systems, Liquidated Damages charged shall

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be  levied  as  above  on  the  total  value  of  the concerned  package  of  the  purchase  order. Quantum of liquidated damages assessed and levied by the purchaser shall be final and not challengeable by the supplier.”

Clause 20.1 which is the arbitration clause and provides

for excepted matters, i.e., those matters the decision to

which  is  specifically  provided  in  the  agreement  itself

reads as under:-

20.1  In the event of  any question,  dispute or difference  arising  under  this  agreement  or  in connection there-with (except as to the matters, the  decision  to  which  is  specifically  provided under  this  agreement),  the  same  shall  be referred  to  the  sole  arbitration  of  the  CGM, Kerala  Telecom  Circle,  BSNL  or  in  case  his designation  is  changed  or  his  office  is abolished,  then  in  such  cases  to  the  sole arbitration  of  the  officer  for  the  time  being entrusted (whether in addition to his own duties or  otherwise)  with  the  functions  of  the  CGM, Kerala  Telecom  Circle,  BSNL  or  by  whatever designation  such  an  officer  may  be  called (hereinafter referred to as the said officer), and if  the  CGM Kerala Telecom Circle  or  the said officer  is  unable  or  unwilling  to  act  as  such, then to the sole arbitration of some other person appointed by the CGM, Kerala Telecom Circle or the  said  officer.  The  agreement to  appoint  an arbitrator  will  be  in  accordance  with  the Arbitration and Conciliation Act, 1996.  

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There  will  be  no  objection  to  any  such appointment on the ground that the arbitrator is a Government Servant or  that he  has  to  deal with the matter to which the agreement relates or  that  in  the  course  of  his  duties  as  a government servant he has expressed his views on  all  or  any  of  the  matters  in  dispute.  The award  of  the  arbitrator  shall  be  final  and binding on both the parties to the agreement. In the  event  of  such  an  arbitrator  to  whom the matter is originally  referred,  being  transferred or vacating his office or being unable to act for any  reason  whatsoever,  the  CGM,  Kerala Telecom Circle,  BSNL or  the said  officer  shall appoint another person to act as an arbitrator in accordance with the terms of the agreement and the  person  so  appointed  shall  be  entitled to proceed from the stage at which it was left out by his predecessors……….”

Clause 15.2 of Section III of the tender document, which

deals  with  the  “delays  in  the  supplier’s  performance”

reads as under:

“Delay by the Supplier in the performance of its delivery  obligations  shall  render  the  Supplier liable  to  any or  all of  the following sanctions, forfeiture of its performance security, imposition of  liquidated  damages,  and/or  termination  of the contract for default”.

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Clause 62 of Section IV of the tender document which

deals  with  liquidated  damages  and  incentive  reads  as

under:-

“The  bidder  shall  be  charged  liquidated damages at the rates as defined in the General conditions of contract as contained in Section III for any delay in the turnkey job entrusted to the bidder.  However  he  shall  be  provided  an incentive @ 0.5% of  the cost of  the network of each  service  area  (Telecom  Circle),  for  each week  of  early  commissioning  of  the  entire network  in  that  service  area,  subject  to  a maximum of 3% of the value of the contract of the circle”.

6. Since this appeal arises out of an order, which appointed

an  arbitrator,  to  decide  the  dispute  referred  to  by  the

respondent, we, in this appeal, need to decide that whether

in view of  the arbitration clause  in  the  tender  document

provided under clause 20 of the said document, the breach

specified in 16.2 is an “excepted matter”.  

7. Mr.  Gopal  Subramaniam,  Additional  Solicitor  General  of

India appearing on behalf of the appellant contended that

in view of the decision of this Court in Vishwa Nath Sood

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vs. UOI  [(1989) 1 SCC 657],  a conjoint reading of clause

16.2 and clause 20.1 would clearly show that clause 16.2 is

covered under the excepted matters as provided in clause

20.1 of the tender document. He further contended that the

High Court had erred in holding that the quantification of

the liquidated damages was subsequent to the decision of

liability  of  liquidated  damages  to  be  payable  to  the

appellant. Therefore, he contended that the respondent had

specifically  subscribed  to  each  and  every  clause  of  the

agreement  without any objection at the tender  stage  and

accordingly,  it  was  not  open  to  them to  claim  immunity

from  the  contractual  obligations.  Thus,  the  matter  in

respect  of  which  the  respondent  sought  reference  to

arbitration was “excepted matter” in terms of clause 16.2 of

the tender agreement.

In order to satisfy us in the aforesaid contentions,

the  learned  Additional  Solicitor  General,  Mr.  Gopal

Subramanium placed strong reliance in the case of Food

Corporation  of  India  Vs.  Sreekanth  Transport  1999

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(4)  SCC 491,  which has given  the  following principles

relating to “Excepting matters” as under :-

“1. These appeals by the grant of Special Leave  pertains  to  the effect of  the usual ‘excepted  clause’  vis-à-vis  the arbitration clause in a Government contract.  While it is true and as has been contended,  that the  authorization  of  the  arbitrators  to arbitrate, flows from the agreement but the High  Court  in  the  judgment  impugned thought  it  fit  to  direct  adjudication  of ‘excepted matters’  in the agreement itself by the arbitrators and hence these appeals before this Court.

2.  At the outset, it is pertinent to note that in  the  usual  Government  contracts,  the reference  to  which  would  be  made immediately hereafter, there is exclusion of some  matters  from  the  purview  of arbitration  and  a  senior  officer  of  the Department usually is given the authority and power  to  adjudicate  the same.   The clause  itself  records  that  the decision  of the  senior  officer,  being  the  adjudicator, shall  be  final  and  binding  between  the parties – this is what popularly known as ‘excepted  matters’  in  a  Government  or Governmental agencies’ contract.   

3.  ‘Excepted  matters’  obviously,  as  the parties agreed, do not require any further adjudication  since  the  agreement  itself provides  a  named  adjudicator  – concurrence  to  the  same  obviously  is presumed  by  reason  of  the  unequivocal acceptance of the terms of the contract by

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the  parties  and  this  is  where  the  courts have found our lacking in its jurisdiction to entertain  an  application  for  reference  to arbitration as regards the disputes arising therefrom and it has been the consistent view that in  the event the  claims arising within  the  ambit  of  excepted  matters, question  of  assumption  of  jurisdiction  of any  arbitrator  either  with  or  without  the intervention of  the court would not arise; the  parties  themselves  have  decided  to have the same adjudicated by a particular officer in regard to these matters; what are these exceptions however are questions of fact and usually mentioned in the contract documents  and  forms  part  of  the agreement as such there is no ambiguity in the  matter  of  adjudication  of  these specialized  matters  and  termed  in  the agreement as the excepted matters…..”      

Keeping  the  aforesaid  principles  in  mind,  let  us

proceed further.   

We may keep on record that the appellants alleged

that respondents had not completed phase I and phase II

of  the  project  within  the  schedule  as  provided  in  the

tender  document  whereupon  the  appellants  had  to

impose liquidated damages and invoke clause 16.2 of the

tender  document.  But  the  respondents  refuted  these

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allegations. The contention of the respondent in this case

was  that  the  delay,  if  any,  was  caused  due  to  the

appellant’s  delay  in  supplying  necessary  inputs  to  the

respondent.  So  the  respondent  contends  that  it  had

performed its part of the contract in time and the blame

for delay lies on the appellant. Thus it is to be noted that

there is a dispute between the parties on the question

whether any breach was committed in this case.

8. The  appellant  had  contended  before  the  High  Court  of

Kerala  that  the  levy  of  the  liquidated  damages  on  the

respondent was a matter outside the purview of the scope

of  arbitration proceedings  as  it  “squarely  falls  within the

exception provided under Clause 20 of Section III, being the

matters for which mode of decision is provided under the

Agreement itself.”

The respondent on the other hand contended that

the claim of the petitioner that the dispute pertaining to

levy of  liquidated  damages  falls  outside  the  arbitration

agreement being an excepted matter is fallacious.

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The High Court held that there was no reason why

the  arbitration  request  on  behalf  of  the  respondent

should not be allowed. It held that clause 16.2 is not an

excepted matter under clause 20 of the tender document.

9. Having heard the learned counsel for the parties and after

examining the judgment of the High Court and the other

materials  on record,  we  are  of  the  view  that  this  appeal

must be dismissed. Clause 20 is the arbitration clause and

provides  that  any  question,  dispute  or  difference  arising

under this agreement or in connection therewith would be

referred to arbitration. To this, an exception is also provided

which lays down that the matters, the decision to which is

specifically  provided  under  this  agreement,  would  not  be

referred to arbitration. From a bare reading of clause 16.2

of Section III  of the tender document, it is clear that if the

tenderer fails to deliver the goods and services on turnkey

basis within the period prescribed, the purchaser shall be

entitled to recover liquidated damages and the quantum of

the  liquidated  damages  assessed  and  levied  by  the

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purchaser  shall  be  final  and  not  challengeable  by  the

supplier.

10. We  are  in  full  agreement  with  the  findings  of  the  High

Court  that  there  was  a  dispute  as  to  whether  the

respondent  had at  all  acted  in  breach of  any terms  and

conditions of the tender document.  

The question to be decided in this case is whether

the liability of the respondent to pay Liquidated Damages

and the entitlement of the appellant, to collect the same

from  the  respondent  is  an  excepted  matter  for  the

purpose  of  clause  20.1  of  the  General  Conditions  of

contract. The High Court has pointed out correctly that

the  authority  of  the  purchaser  (BSNL)  to  quantify  the

Liquidated  Damages  payable  by the  supplier  Motorolla

arises once it is found that the supplier is liable to pay

the damages claimed. The decision contemplated under

clause 16.2 of  the agreement is  the decision regarding

the  quantification  of  the  Liquidated  Damages  and  not

any decision  regarding  the  fixing  of  the  liability  of  the

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supplier.  It is necessary as a condition precedent to

find that there has been a delay on the part of the

supplier  in  discharging  his  obligation  for  delivery

under the agreement.

It is clear from the reading of clause 15.2 that the

supplier  is  to  be  held  liable  for  payment  of  liquidated

damages to the purchaser under the said clause and not

under  clause  16.2.  The  High  Court  in  this  regard

correctly  observed  that  it  was  not  stated  anywhere  in

clause 15 that the question as to whether the supplier

had caused any delay in the matter of delivery will  be

decided either by the appellant/BSNL or by anybody who

has  been  authorized  on  the  terms  of  the  agreement.

Reading clause 15 and 16 together, it is apparent that

clause 16.2 will come into operation only after a finding

is entered in terms of clause 15 that the supplier is liable

for payment of liquidated damages on account of delay

on his part in the matter of making delivery. Therefore,

clause 16.2 is attracted only after the supplier’s liability

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is fixed under clause 15.2. It has been correctly pointed

out  by  the  High  Court  that  the  question  of  holding  a

person liable for Liquidated Damages and the question of

quantifying the amount to be paid by way of Liquidated

Dmages  are  entirely  different.  Fixing  of  liability  is

primary, while the quantification, which is provided for

under clause 16.2, is secondary to it.

There is no provision in the agreement, apparent on

the face of it, relating to a decision made by any specified

authority on the issue of levy of Liquidated Damages, as

is  contemplated  under  clause  20.1  of  the  agreement

which  is  excepted  from the  purview  of  arbitration.  No

decision  coming  within  the  scope  of  excepted  matters

under  clause  20.1  is  envisaged  by  any  portion  of  the

agreement  regarding  the  liability  of  the  supplier  to

liquidated damages.

Quantification  of  liquidated  damages  may  be  an

excepted  matter  as  argued  by  the  appellant,  under

clause 16.2, but for the levy of liquidated damages, there

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has to be a delay in the first place. In the present case,

there is a clear dispute as to the fact that whether there

was any delay on the part of  the respondent.  For this

reason, it cannot be accepted that the appointment of the

arbitrator  by  the  High  Court  was  unwarranted  in  this

case. Even if the quantification was excepted as argued

by the appellant under clause 16.2, this will only have

effect when the dispute as to the delay is ascertained.  

Clause  16.2  cannot  be  treated  as  an  excepted

matter because of the fact that it does not provide for any

adjudicatory process for decision on a question, dispute

or difference, which is the condition precedent to lead to

the stage of quantification of damages.

The  above  stated  position  can  be  ascertained

through the judgment of this Court in the case of State

of  Karnataka  vs.  Shree  Rameshwara  Rice  Mills,

(1987) 2 SCC 160. This Court in the said case, made a

clear  distinction  between  adjudicating  upon  an  issue

relating to a breach of condition of contract and the right

to assess damages arising from a breach of condition. It

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was  held  that  the  right  conferred  to  assess  damages

arising  from a breach  of  condition  does  not  include  a

right to adjudicate  upon a dispute relating to the very

breach  of  conditions  and  that  the  power  to  assess

damages  is  a  subsidiary  and consequential  power  and

not the primary power.

11.Clause 20.1 regarding excepted matters reads “In the event

of  any  question,  dispute  or  difference  arising  under  this

agreement  or in connection there-with (except as to the

matters, the decision to which is specifically provided

under this agreement)…”.  Therefore  it  is  clear from this

provision, matters which will not fall within the arbitration

clause are questions, disputes or differences, the decision

to  which  is  specifically  provided  under  the  agreement.

Clause 16.2 is not a clause where in any decision making

power  is  specifically  provided  for  with  regard  to  any

question, dispute or difference between the parties relating

to the existence  of breach or the very lack of liability for

damages, i.e. the levy of Liquidated Damages.

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12.The learned senior counsel for the appellant relied on the

decisions  of  this  court  in  Vishwanath  Sood  vs.  UOI

[(1989)  1  SCC  657],  and  General  Manager,  Northern

Railway vs.  Sarvesh Chopra  [(2002) 4 SCC 45]. These

cases,  we  are  afraid,  will  not  be  of  any  help  to  the

appellants  being  distinguishable  on  facts  and  having

different contractual clauses. We may note that clause 16.2

cannot be treated as an excepted matter. This is because

admittedly, it does not, provide for any adjudicatory process

for decision on a question, dispute or difference, which is

the  condition  precedent  to  lead  to  the  stage  of

quantification of damages nor is it a no claim or no liability

clause.

In Vishwanath Sood’s case (supra), it was held by

this court that a particular claim of the government was

excluded because the Superintendent Engineer acted as

the revisional authority to decide disputes between the

two  parties  by  an  adjudicatory  process,  there  being  a

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complete machinery for settlement of the disputes in the

relevant  clause  and  most  importantly,  the

Superintendent  Engineer  had  the  discretion  on

consideration of  the facts and circumstances including

mitigating facts, held no damages was payable. Again in

the case of Sarvesh Chopra, this court had held that the

claims covered by the no claims clause, i.e.,  where the

contractor had given up the right to make a claim for

breach on the part of the government was not arbitrable

in terms of the arbitration clause contained therein and

clause 63 of the general conditions of the contract which

provided  for  exclusion  because  no  claim  clause  was

excepted as such claims were simply not entertainable.

In  view of  the  discussions  made  hereinabove,  we  hold

that  the  disputes  raised  by  the  respondents  are

arbitrable and not excepted from scope of arbitration.

13.We feel  that there are certain other issues that are to be

discussed  while  disposing of  this appeal.  The  respondent

contended in its written submission filed before this court

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on 14th May, 2007 that the quantum of damages calculated

by  the  appellant  in  respect  of  clause  16.2  of  the  tender

document, simply cannot have the effect of rendering all the

above disputes as not being arbitrable. We find that there is

considerable  merit  in this argument.  The  true essence  of

any arbitration agreement is to arbitrate the matters in a

cordial  way in respect  of issues where there is a dispute

between  the  parties.  To  construe  such  limited  words  in

clause 16.2 as being so all encompassing would destroy the

very  foundation  of  the  bargain  between  the  parties.  The

appellant in the present case is acting in an unfair way by

seeking to exclude, from arbitration, what it has agreed to

arbitrate in the first place.

14.The appellant contended that it has the unilateral right to

determine the Liquidated damages under clause 16.2 and

that the quantum of  Liquidated Damages  decided  by the

appellant, even if it is exorbitant, would be final and cannot

be challenged.  We find the contention of the respondent

that if the said contention of the appellant is supported, it

would mean that a party would be held liable to damages of

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whatever  amount  the  other  party  demands  without

recourse to a remedy, to be relevant and should be given

due importance. Such a contention by the appellant would

be in violation of Section 28 and Section 74 of the Indian

Contract Act.  

15.The learned counsel of the appellants had submitted before

this court that it was the appellant, which had the right to

appoint the arbitrator. This submission cannot be accepted.

The respondent had invoked the arbitration clause on the

ground that there was no delay on its part by sending a

letter to this effect to the appellants on 24th of March, 2006.

On 25th April,  2006,  the  appellants/BSNL replied  stating

that they had rightly recovered the Liquidated Damages and

that the recovery of the damages was not arbitrable.  The

appointing authority in this matter, i.e.,  CGM Kerala, did

not  respond  to  the  notice  requiring  the  appointment  of

arbitrator and failed to act within the time prescribed under

the  Arbitration  and  Conciliation  Act  1996.  Since  the

appointing  authority  appointed  no  arbitrator,  the

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respondent/Motorolla, on 25th of May, 2006, filed a petition

under Section 11 of the said Act before the High Court at

Kerala. In the case of Datar Switchgear vs. Data Finance

Lt. [(2000) 8 SCC 151], which was affirmed in Punj Llyod

Ltd. vs.  Petronet MHB Ltd.  [(2006) 2 SCC 638],  it  was

held  that  once  a  minimum of  30  days  is  expired  and a

petition is filed to the court, the appointing authority loses

the  right  to  make  the  appointment.   Therefore,  the

appellant/BSNL  has  now  lost  its  right  to  appoint  any

arbitrator for settling the disputes under the agreement.

16.Further, CGM Kerala Circle has already taken a decision as

is evident from his letter dated 25th of April, 2006, that the

appellant was right in imposing the liquidated damages and

therefore,  the  question  of  such  a  person  becoming  an

arbitrator does not arise as it would not satisfy the test of

impartiality  and independence  as  required  under  Section

12 of the Arbitration and Conciliation Act, 1996. Moreover

it  would also defeat  the notions  laid down under  the

principles  of  natural  justice  wherein  it  has  been

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recognized that a party cannot be a judge in his own

cause. The judgment of this Court in State of Karnataka

vs. Shree Rameshwara Rice Mills, (1987) 2 SCC 160, is

significant in this matter. The Court had stated:

“…..Even assuming that the terms of Clause 12 afford scope for being construed as empowering the  officer  of  the  State  to  decide  upon  the question  of  breach  as  well  as  assess  the quantum  of  damages,  adjudication  by  the officer regarding the breach of the contract can not be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interest of justice and equity require that where  a  party  to  a  contract  disputes  the committing  of  any  breach  of  conditions  the adjudication  should  be  by  an  independent person or body and not by the other party to the contract”.

17.The provision under clause 16.2 that quantification of the

Liquidated  Damages  shall  be  final  and  cannot  be

challenged by the supplier Motorolla is clearly in restraint

of  legal  proceedings  under  section  28  of  the  Indian

Contracts Act. So the provision to this effect has to be held

bad.

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18.Pursuant to section 4 of the Arbitration and Conciliation

Act, 1996, a party who knows that a requirement under the

arbitration agreement has not been complied with and still

proceeds with the arbitration without raising an objection,

as soon as possible, waives their right to object. The High

Court  had  appointed  an  arbitrator  in  response  to  the

petition filed by the appellant. At this point, the matter was

closed unless further objections were to be raised. If further

objections  were  to  be  made  after  this  order,  they  should

have been made prior to the first arbitration hearing. But

the  appellant  had  not  raised  any  such  objections.  The

appellant  therefore  had  clearly  failed  to  meet  the  stated

requirement to object to arbitration without delay. As such

their right to object is deemed to be waived.

19.Finally  we are  of  the  opinion  that  the  contention of  the

Respondent that Clause 62 referring to special clauses has

an overriding effect  on Clause 16.2,  cannot be accepted..

There  is  in fact  no  conflict  between  clause  62 and 16.2.

Clause  62 has two parts  in it.  One  part  referring  to  the

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Liquidated damages and the other part refers to incentives

in case the respondent/Motorolla performs its part of the

contract  within  time.  The  part  dealing  with  Liquidated

Damages under clause 62 in fact refers it back to clause

16.2 dealing with the quantification of Liquidated Damages.

So it is apparent that there is no dispute between clause 62

and clause 16.2.

20.For the reasons aforesaid, we are of the view that the High

Court was justified in passing the impugned judgment and

there is no infirmity in the impugned order for which we

can interfere with the order of the High Court. The appeal is

therefore dismissed. There will be no order as to costs.

    …….…………………….J.     [Tarun Chatterjee]

New Delhi;   ……..………………………J. September 15, 2008.   [Lokeshwar  Singh

Panta]

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